Finding the Best Insurance for Your Small Business

Owning a small business involves taking risks. Besides having to face the possibility of losing money because of poor sales, you also have to be prepared for unexpected misfortunes such as accidents, thefts, fires and lawsuits.

One way to protect you against such misfortunes is to purchase small business insurance.

Risks of Not Having Small Business Insurance

One of the main risks you need to face if you do not have small business insurance is financial loss.

Misfortunes such as theft, vandalism, fire, flood and accidents can result in severe damage or loss of property. If your equipment, furniture, vehicle or other type of property is damaged or stolen, you may have to spend a substantial amount of money to repair or replace them.

Property damage or loss can also disrupt your business operations, leading to loss of work time and productivity, as well as business opportunities.

In the event that an accident occurs in your premises or one of your products causes bodily harm, you may find yourself facing a lawsuit. A lawsuit does not only set you back financially; it can also jeopardize the reputation of your company.

Types of Small Business Insurance Coverage

Insurance companies provide protection for every conceivable risk that small businesses are exposed to, but some types of coverage may not be necessary for your business.

If you are unsure which types of coverage you should purchase, you can seek advice from your insurance provider.

Below are some of the types of coverage that are typically included in small business insurance policies:

• General liability insurance - General liability insurance covers liability losses and legal expenses that are incurred when your customers or visitors suffer bodily injuries or property damage in your business premises.

• Product liability insurance - This form of insurance pays for financial losses that result from defective products that cause bodily harm.

• Professional liability insurance - Also known as errors and omissions insurance, professional liability insurance protects you against errors, negligence and malpractice that occur when you are providing services for your customers.

• Commercial property insurance - Property insurance covers losses that you sustain because of damage or loss of company property resulting from events such as vandalism, fire, flood, storm and civil disobedience.

• Workers' compensation insurance - This type of coverage provides protection against lawsuits that result from accidents in the workplace. It also enables injured workers to obtain compensation without establishing fault.

Cost of Small Business Insurance

The cost of small business insurance can vary greatly depending on the insurer you purchase your policy from, types and levels of coverage you choose, value of your commercial property, types of products or services you sell, size and location of your business, sales, payroll and other factors.

Most small business owners pay between $2,000 and $5,000 a year for insurance coverage. It is recommended that you compare prices from a few insurers first before you purchase your business insurance.

Misfortunes can cause severe damage to your business.

While there is no sure way to prevent them from happening, you can minimize their financial impact by getting adequate insurance.